Backlinks and ranking

Backlinks, also named inbound links, reflects the popularity of a site and its audience. Matt Cutts was the member of the Google's SEO staff who communicates the most often on medias about the algorithm. He said in an interview published on the Stonetemple site, in Octobre 8, 2007:

"I would certainly say that the links are the primary way that we look at things now in terms of reputation."

The variable quality of inbound links

According to Matt Cutts, that leads the Webspam team of Google, a quality link has the following characteristics:

Links in footer

These are links that are requested by those who provide elements of site such as templates for Wordpress for example. The author wants to have in a footer link on his site, and embeds the link in his template. Or they are links to friend sites.
These links obey to a general law, if they are not relevant, if they have nothing to do with the content of the blog, they have no value. Since October 2012, Webmaster Guidelines prohibit lots of footer links:

Links widely distributed in the footers are considered unnatural and part of a link scheme.

Reciprocal links

Google previously advised against reciprocal links. Then his record has been refined: it discourages excessive reciprocal links. But what is excessive?

If the links are not natural, and irrelevant, if you request a backlink when you make a link to a site, these interactions are considered excessive.
They are not if they are useful to visitors.

Reference: Interview with Matt Cutts by Eric Enge July 16, 2008.

List of links prohibited by Google

In Guidelines to Webmasters, it is confirmed certain types of links considered unnatural can penalize a site:

But these links are not a cause of penalty if they are in nofollow.

Javascript links

If they are easy to interpret - because Google can execute JavaScript code - they are taken into account as regular <a> tags and may even pass PageRank to the page that is linked. We know as this has been confirmed by Matt Cutts, the Google spokesman about referencing issues, especially the second point.

They are used to discover and to index pages by search engines. And so they are treated as HTML links and can pass PageRank. A JavaScript link is typically a link like this:

<span onClick="location.replace('')" />Anchor</ span>
or with an image:
<img src="image.jpg" onClick="location.replace('')"  />
It is then easy to interpret these links by search engines. But it is possible to write JavaScript code to make an URL invisible to search engines.

Disavowing backlinks is it a good practice?

There was a time when maximum backlinks on its site were wanted, regardless of the quality of these, but after the Penguin Update penalizing a site for an excess of bad links, the trend reversed and webmasters now want absolutely remove bad links to their site. Links are undesirable when there links from pages with objectionable content, or directories without visitors beside sites unrelated to yours, or paid links.
After Penguin thus a tool became indispensable: allowing a webmaster to delete (virtually) links to its site. It is now done, since October 17, 2012, this is part of Google Webmaster Tools.
This tool is not to be used by everyone, only those sites that were penalyzed by these bad links should use it.

If you are the webmaster of the site, you can find a partial list of inbound links through Google Webmaster Tools or with Bing Webmaster Tools. Otherwise, you can use tools in the Webmaster section.

See also: Some advice to how to get backlinks.